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New uses for the Point

THE BALTIMORE SUN

The buyers of the defunct Sparrows Point shipyard plan to redevelop the 250-acre facility at Baltimore County's southeast corner into a vast industrial park, leasing space to barge building and ship repair companies as well as other businesses.

Barletta Willis Investments, a partnership between Vincent Barletta, the president of Boston-based heavy construction firm The Barletta Co. and Boston venture capitalist Robert Willis, 35, is set to close on the $9.75 million deal this week to buy the sprawling shipyard, operated at its peak by Bethlehem Steel Corp., and in recent years by now bankrupt Baltimore Marine Industries Inc.

"The key here is going to be a long-term, steadfast, consistent commitment to bringing tenants that will bring activity and jobs and feed off of one another," said Barletta, 34, a fourth-generation owner of his family's construction business that builds roads, highways, bridges and tunnels.

"This is a great facility for ship repair," he said recently as he walked in the now silent shipyard. "But it's only a percentage of the work we'll do here, whereas that was BMI's bread and butter. "I'm putting together multiple business lines that will use Sparrows Point shipyard to its full potential."

Barletta said talks were continuing with potential tenants but declined to reveal more information until after the closing, tentatively scheduled for tomorrow. Initially, Barletta Willis plans a $20 million investment, including the yard's purchase price.

Despite the lack of specifics, the ambitious plan is being cheered by government officials as a key economic engine to jump-start a once-booming industrial waterfront and create -- by the developers' count -- up to 1,500 jobs over the next three years.

"That's exactly the vision we had for the site," said Aris Melissaratos, Maryland's secretary of business and economic development. "Other potential buyers wanted to do some of that, but none said they wanted to do all of that."

The shipyard shut down at the end of October after filing for bankruptcy protection last summer. BMI had stopped most work by June, when it laid off more than 200 of its remaining employees, and the U.S. Bankruptcy Court subsequently ordered it auctioned. Barletta Willis bought the shipyard in November.

During a recent visit to the site, Barletta pointed out a graving dock the length of four football fields, where large vessels such as cruise ships could be repaired. In other buildings, he envisions more workers filling orders for double-hulled barges, or building bridge beam trusses, construction steel, frames for generators and sections of bridges. Those operations would encompass about 800,000 square feet of the existing buildings on about 80 acres, Barletta said.

Another 400,000 square feet of buildings on about 50 acres on the long-unused north end of the site would become an industrial park for warehouses and distribution centers.

The company plans to pump about $10 million into the shipyard to make it operational. The initial investment to clean up the site would allow work to begin by May 1 on ship repairs at the graving dock and steel fabrication work at the machine shop, bringing in at least 100 jobs at first and about 400 eventually, Barletta said.

The development team has been negotiating with a ship repair company, which already has contracts, that could sign on as a tenant and represent about 20 percent of the business at the facility, Barletta said. He said it was too early to release any more details about the company.

Another tenant would be a machine shop operator that would account for another 20 percent of the yard's work.

A barge building company, yet another tenant, would represent about 15 percent of the work, and a new line of business altogether for the site.

The rest of the property would be leased as an industrial park for general and industrial use, perhaps to some companies that need to ship products or raw materials. The shipyard owners have been contacted by about 10 potential tenants for the north section's industrial park, said Stephen P. Gilbert, a broker for Manekin LLC, which is handling leasing.

The hope is "each use can link to the next," Gilbert said.

The shipyard employed 8,000 at its peak during World War II under Bethlehem Steel's ownership. But the ship repair and ship breaking industry has been challenged along the East Coast by currency fluctuations, labor costs and more stringent environmental standards, experts said.

BMI relied too heavily on defense work, experts said. The company had blamed its woes on the Iraq war. As Navy ships were deployed abroad, work dried up and it lost money.

"Relying on defense work was not smart," said Peter Shaerf, senior vice president of American Marine Advisors Inc., a New York merchant bank that focuses on the maritime industry. "You have to attack the commercial market, and you have to offer a diverse portfolio of products so you're not dependent upon any one ship class."

The yard could do well to position itself as a barge building operation, especially because the American barge fleet is aging rapidly and becoming more expensive to maintain, Shaerf said.

Shaerf estimated that about half of the American fleet of some 20,000 barges is at least 20 years old, while about a quarter of the fleet is 25 years old.

"As aging barges get scrapped, newer barges do have to be built" for an inland waterway system that transports coal and grain, he said.

To win barge-building business from some of the bigger barge companies, the shipyard would need to compete on price, he said.

The same applies to the ship repair business, anything from cruise ships to containerships needing regular maintenance or emergency repair.

The yard has strong potential because of its deep-water access, the legacy of shipbuilding and ship repair and the availability of a skilled work force, said David S. Iannucci, executive director of the Baltimore County Department of Economic Development.

But what it has lacked is an owner willing to make the necessary investment.

"The single most important thing that Barletta Willis could do that the previous owner was not willing to do is invest the capital necessary to bring the equipment up to current standards, make the necessary repairs to the floating dry dock to meet Navy specifications," Iannucci said.

"Building and repairing ships is an expensive undertaking. You need an owner with deep pockets to make those investments."

Others expect that work could come through a federal Maritime Administration transportation initiative called "short-sea" shipping, designed to relieve growing freight congestion on the highways and rail systems.

Government officials view short-sea shipping as a viable, fuel-efficient and environmentally sound commercial transportation alternative in which inland and coastal waterways, not oceans, are plied to move commercial freight between major ports and destinations.

"There's going to be a big push for short-sea shipping ... in order to take some of the pressure off some of the highways, and if all of that goes right, as I expect it will, there will be a lot of business," said Helen Delich Bentley, the former Baltimore County congresswoman and longtime port adviser.

"They have started out right in their approach," Bentley said of the developers. "They're willing to put up the money."

The plans for Sparrows Point came as good news to Bob Hill, president of Ocean Tug and Barge Engineering Corp. in Milford, Mass.

As a designer of tugboats and barges that ply the waterways carrying coal and grain, Hill said he has little choice when it comes to finding shipyards to build vessels in the larger sizes his customers increasingly want. Only a couple of the nation's shipyards have large enough facilities, he said.

But now he's looking forward to having another choice.

"Adding a competitive yard," Hill said, "would be a good thing for the industry."

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